BoJ Governor Haruhiko Kuroda remained optimistic that inflation, at around 0.5% currently, would accelerate toward the 2% target. Though, he reiterated again that “we will adjust policy as necessary to maintain momentum toward our price stability target while examining risks.”

And, “we will not hesitate to take additional easing steps if risks heighten to an extent that the momentum toward the price target is undermined.”

In a Nikkei interview, BoJ Governor Harukiho Kuroda maintained his optimistic view on the economy. He noted that “we’re maintaining momentum toward the price stability target” of 2% inflation”. Also, “domestic demand — consumer spending and capital investment — are relatively firm.” However, “caution is needed” due to overseas uncertainties, in particular with trade war. Cutting interest rates “further into the negative zone is always an option” if more monetary stimulus is needed.

BoJ has laid out the four policy options in case of a downturn. Those include cutting the short-term policy rate, lowering its target for long-term rates, stepping up asset purchases and accelerating expansion of the monetary base. Kuroda said “we’re considering a variety of possibilities, including combinations of these and improved versions.”

Released from Japan, overall household spending rose 0.8% yoy in July, below expectation of 0.9% yoy. Labor cash earnings dropped -0.3% yoy, below expectation of 0.1% yoy. Leading indicator rose 0.3 to 93.6, above expectation of 93.2.

BoJ Governor Haruhiko Kuroda said in the quarterly branch manager meeting, “Japan’s economy has picked up as a trend, although some weakness has been seen in part, mainly due to the impact of COVID-19.”

“As downward pressure on service consumption and the impact of supply shortages diminish, a pickup in overseas demand, accommodative monetary policy, and the government’s economic stimulus will likely help the Japanese economy recover despite being affected by rising commodity prices,” he added.

Kuroda also cautioned that “extremely high uncertainties” remain over how the crisis in Ukraine will impact commodity prices and the Japanese economy. But he also indicated that commodity inflation is unlikely to trigger a change in the central bank’s ultra-loose policy, because it wouldn’t last long.